Thinking About Starting a Record Label? Here’s How!

Have you thought about starting a record label? Lots of labels have been created by someone saying that they have one. The reality is that it is that simple, in some ways at least. Some of the very best labels out there have simply made things up as they went along. Of course, it takes a little setting up to ensure your chances of success and protect your investment. This guide will help you get started with your record label.

Before getting started, we want to be sure that you’ve thought the whole thing through and thought about what having a record label means. It can be fun to run an independent record label, but it takes a lot of commitment and even more money. It’s vital that you go into this aware of what will be expected of you. Here are some things to consider:

If you’re starting a record label in order to release your own music, you should know there are some limitations to being both the owner of the label and the sole artist on it. No matter how good your intentions are, there’s the risk that your record label will be seen as nothing but a vanity project. This means distributors might hesitate to work with you and you may have a harder time finding investment. If you are planning in-house promotion, then remember that it can be uncomfortable for all involved to have to call up journalists and ask them what they thought of your music. This doesn’t mean that you can’t start a record label just to release your own music. We just want to be sure you understand it comes with some complications and limitations that other labels won’t be dealing with.

You’re going to have to work on the label each and every day, even if you’re already pulling a full-time job. Ask yourself if you have the time to invest in ensuring the label works.

No matter how much money you’ve budgeted and set aside for this record label, it’s going to cost more.

Choose a Business Structure and Label Name

Many labels might skip this step, at least at first, but you should get your record label set-up as a legitimate business entity as soon as possible. You must be an actual, legal business if you are going to create a business bank account and credit card, and being a legal business makes things easier when tax time rolls around. Not to mention you have to be a legal business if you’re going to apply for business loans and other forms of business funding.

The names and specifics of different business frameworks can differ between countries, states, and even cities. You’re going to have to spend some time researching the laws for your area and printing out the forms needed to set up your company. Here are some general guidelines that apply no matter where you are and are important to keep in mind.

If you are bringing partners in to your record label, then you must have a partnership agreement that outlines what percentage of ownership individual partners have, how partners are able to leave the business if they want, how business decisions will be made as a partnership, and so on. The laws associated with business structure where you live may dictate the partnership agreement, or you might need to come up with a separate agreement. It’s vital you understand the laws where you live. Never skip the research phase.

A simple business structure is good enough for most indie labels; one where partners are protected from personal liability if something were to go wrong with the label.

This would also be the time to understand how the company is going to operate. Who will be responsible for different tasks, and how do you plan on paying any employees? If you don’t address these issues in the paperwork to set up a business, then you should put together a separate contract that includes this information.

Lastly, this is also the time to come up with a name for your record label. Be sure to do a bit of online research to ensure that no one else has a record label with your name. If there is already a record label set up under that perfect name you came up with, you’ll have to come up with something different.

Find Music for the Label

Most people start a record label because they heard some incredible music that other people weren’t getting behind. They wanted to be the one to spread this music around because they felt it deserved it. If that was you, then that’s great. You’re free to just move on to the next step and ignore this one. If you’ve only come up with the idea of starting a record label and you need some music to get started, then now would be the time to find it. You need to have a release – if not several releases – lined up to get started with the next steps of finding distribution and managing PR. After all, you need music in order to sell and promote it!

It can be more difficult than you might think to find music to release on a label. It’s like finding that proverbial needle in a haystack. Keep things easy by starting out on the local level. Check out local musicians and see if there’s any that you like and feel you could work with. You can also listen to some new music on indie music sites like Bandcamp, ReverbNation, and other websites that feature independent artists.

Running an indie label is truly a labor of love. That’s why we recommend holding out until you find music and artists that you genuinely believe in. When starting a record label, there’s a feeling that you need to get started as soon as possible. In the long run tough, it’s worth waiting until you get some records that you love and want to showcase to the world.

Indie Label Contracts: The Framework and Artist Deals

After finding some music that you want to release, it’s time to arrange a deal with the artists behind the music. One great thing about having an indie label is that you can put together just about any kind of deal you want. This makes things much easier when you create deals that work for you and artists on a case by case basis. With that said, it’s good to know what limitations you might have. It’s also worth putting together basic principles to keep in mind when putting together deals. Here are some things to consider when creating an indie label contract:

Do you want the musician to provide you with a master, or will you put some money towards recording costs?

Are you going to pay advances to artists? How much? If you’ve got a small budget, then you should to convince potential signings to keep any advances small so you have enough money left to promote their music when it is released.

How are the earnings from releases going to be divided up? Are artists going to get a percentage, or will you be splitting things 50/50? Is your label going to recoup the manufacturing and promotional costs before paying an artist their share?

Will your artists have the chance to approve promotional expenditures over a set amount? If so, then how much?

How many promotional/free copies are you going to give artists? What amount will they pay for extra copies after this limit?

How long is the deal for?

Is the deal going to be for just one album, or several albums?

Are musicians entitled to audit your books? How often will they be able to do this, and what kind of notice do they have to give?

Working Out Distribution

When starting a record label, finding music worth releasing and finding a distribution channel for it is something of a chicken and egg situation. Distributors will want to know that you’ve got music ready to distribute before committing to working with you in some cases. At the same time, musicians will want you to have a distribution channel ready before signing on to the label. Sometimes when starting an independent label, unsigned musicians are willing to sign up before distribution has been arranged. That is the best case scenario. If you are able to do this, then you don’t have to do much other than try to work on getting soft commitments from different people. That way you have something to present to someone. Here are some things you should remember about distribution:

Digital distribution is obviously easier to manage and find than physically distribution. Aggregating services such as Tunecore put your music up on a range of sites including Amazon and iTunes. These services can be set up immediately, so there’s no need to wait around with great music while you look for a distribution channel.

There are some physical distributors that are willing to work with anyone, but the ideal solution is finding a distribution deal with a company that is more selective about what labels they work with. These are companies that are going to get actively involved in selling releases to stores and they will often pitch in with the advertising and help spread the word. These are the companies that will typically want to know you’ve already got a big release schedule planned. They aren’t that interested in helping a label release just one thing.

Distributors will sometimes arrange M&D deals. That is to say that they will pay for the manufacturing and recoup these costs from sales. This can help a lot with your cashflow for the short term, but it is getting harder and harder to find these kinds of deals.

Working Out Promotion

Promotion is vital to selling releases. There are several different areas of promotion that must be covered, or at least considered, depending on your budget:

The first decision you have to make regarding promotion is if you are going to handle promotion yourself, or if you plan on hiring someone else to take care of it. Keep in mind that PR companies typically specialize in one or two areas of promotion. They might cover college and commercial radio, they may deal with print media only, and so on. That basically means if you want to hire someone else to handle promotion, you may have to pay several individual companies if you want to cover a broad range of options. While you should reserve most of your budget for a release for the promotional costs, upstart independent labels might not have the money to hire an outside PR firm for all the different aspects of promotion.

There are some things you can do to manage budgetary constraints and still run quality promotion:

Manage all promotion in-house. If you haven’t done any promotion work in the past, then you are going to have to do the groundwork first. This includes things like putting together a press database of connections.

Hire PR firms to manage certain parts of the overall campaign. Do you think that you could handle print and online promotion yourself, but you aren’t sure how radio promotion works? If so, then hire someone to handle radio promotion while you handle the rest. Hiring someone to do the things you can’t is a great way to cover all your bases.

If you plan on managing press by yourself and you’ve never done anything like this before in the past, make sure that you set aside extra time before making your first release to put together a promo plan. Failing to plan is planning to fail.

Set Up the First Release

You’re now ready to go! Now comes choosing a release date for the first release. If you’re planning on doing digital distribution exclusively, then you needn’t worry about things such as manufacturing turn-around times. There’s a little more to the process if you are planning on physical releases. Here are some of the things that can impact a release data – assuming that you’ve got your finished master in hand and without considering promo factors right now:

Approving the artwork

Manufacturing times (expect delays as they happen more often than you’d think). Also keep in mind that for your first few jobs with a new manufacturer you will be expected to sign off on printing before the job will be completed.

The release date a distributor wants for the music. They will come up with a good time to sell releases through their stores. They will also want to time the release so that it doesn’t get overshadowed by any bigger releases they have coming up. While it might be annoying to have your release date changed because of a big release, it’s definitely in your best interests to have a distributor focus on your project and want to make it succeed. They make these suggestions and demands for your sake as well as theirs.

Now we can consider promotion. You should give yourself plenty of lead time when it comes to promotion. That way all of the interviews, reviews, and radio play will hit around the time that the release becomes available for people to purchase. Consider things such as the print schedules of magazines you expect will give you coverage, and ensure that your chosen release date gives them ample time to write about the release when it is released. A good rule of thumb is to give yourself at least eight weeks to put together a promo campaign, especially for a first release.

Of course, there will be times you just won’t be able to meet these promotional time constraints. Don’t sweat it if that happens to you. Reviews can trickle in after the release date, and that’s fine. There’s a chance that your first release will have a slow burn. Try not to worry if it doesn’t take the world by storm immediately.

First Release Redux: Ride that Learning Curve

Running your own record label is definitely a learning process. There’s a good chance that even with the best intentions and the most carefully laid out plans possible, you’ll make some kind of mistake with the first release. There’s nothing wrong with that. You’ll likely make mistakes with your second, fifth, and even fifty-fifth release. The trick is to make sure that you’re making different mistakes. Take some time after the first release to evaluate the process and decide the things that went right and what you feel could be improved on. Apply those lessons to the next release. Move on from the mistakes. As long as you learn from the mistakes and from each release, then you’re doing fine. Really.

Tips for Starting a Record Label

It’s been said before, but it does bear repeating that running a record label is a learning process. When committing to starting a record label, commit to having to go through the ups and downs of doing that. There are times when things will go wrong, even if you’ve done everything right. That is not a failure. That is life. The trick is to not let the disappointments derail your overall progress. It sounds somewhat cheesy, but staying positive and rolling with the punches is an important part of ensuring the long-term success of your record label.

Don’t try to bluff or overshoot your way through something you don’t understand. If you aren’t going into this with a lot of experience with the music industry and are learning as you go, then you should ask lots of questions and be realistic and honest about the things you don’t know. It’s the only way to gain the knowledge that you so desperately want and need.

Be honest with artists about what you will be able to provide them with, and what you won’t. If problems do come up, then you should be honest about that too. Having a bad reputation in the industry can kill a label and they are almost always caused by being dishonest.

You’re almost always going to go into some debt when starting a record label unless you’ve got a soft financial cushion to land on. You can soften this financial freefall by being smart about spending your money. Spending money on promotion is fine. That’s an investment for future earnings. Spending money on a yellow vinyl 10” pressing? That’s not good use of money now is it?

Don’t be a trendchaser. Focus on releasing and promoting high-quality music, nurturing a solid fanbase, and being good to the artists on your label. Things will fall into place for you if you focus your efforts on the basics.

Be creative; a cheap and powerful solution for something like artwork can turn into a selling point rather than becoming a negative. It’s not about the glitz and the glam. It’s about putting out quality music that can stand on its own merits.

Treat the label itself like one of the artists on it. Promote the name and brand of your label and build an identity for it.

As usual let me know if this article was helpful and tell me what you would like to have covered on my blog!

Talks soon

Numberz

2 Comments

Cdm Alabama
on July 15, 2018 at 10:41 am

This is a great article, thanks so much..
A good info to start up with